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Highlight Updates USDA Forbearance

Just UpdatedSignificant Law Change

USDA direct and guaranteed loans are eligible for CARES Act forbearance. With respect to guaranteed loans, the USDA essentially restates the provisions of the CARES Act. According to the USDA, “[u]pon completion of the forbearance, the lender shall communicate with the borrower and determine if the borrower is able to resume making regular contractual payments.”107 Consistent with FHA policy stated above, initial forbearances must be approved by March 31, 2021; however, advocates should monitor for further updates due to the changing administration.

For direct loans, the USDA’s guidance refers to CARES Act forbearance as moratorium assistance and states that it can be requested verbally. It recognizes though that borrowers could still receive a standard moratorium even after the CARES Act protections have ended. “At the end of the 1-year time period, these 502 Direct borrowers can request the moratorium be extended up to an additional year making it a total of 2 years. However, the borrower must submit a moratorium application and meet eligibility criteria to be granted that last year.”108


  • 107 Id.

  • 108 Id.